Macomb County looking toward a financial, structurally sound future

Macomb County’s leadership does not need to solve all future problems right now. But it is our duty to address both immediate problems and ones with solutions in our reach, and such an opportunity has presented itself.

This opportunity is two-fold, in that through the issuance of bonds the County could pre-fund its future Retiree Healthcare Annual Required Contributions (ARC) for the next 50 years, while also addressing needs in the 5 Year Capital Improvement Plan, which includes revitalization efforts in downtown Mt. Clemens.

With the retiree healthcare plan alone, a huge obligation would be shored up by issuing $270 million in bonds to cover our current unfunded liability. While there is risk in such a financing mechanism, I see this as the best option to ensure county employees will receive the healthcare they have been promised, the healthcare they have worked toward after a career of service.

By borrowing at a low interest rate (around 4 percent) and investing at a higher rate of return (7.5 percent) we will be able to pay down our debt service payment from the general fund. Also, the Retiree Healthcare Trust (VEBA) will receive a $30 million a year ARC payment from the Interim Retiree Health Medical Benefits Trust, which will be funded by $270 million in bond proceeds, $40 million from the general fund and $30 million from the Treasurer’s revolving tax fund. These one time contributions will allow for the $30 million to flow into the Retiree Healthcare Trust annually, which will then allow annual retiree healthcare premiums to be paid for the next 50 years.

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This proposal not only shows a long-term consideration for county finances and promised employee benefits, but also cooperation. County Executive Mark Hackel and Treasurer Ted Wahby have collaborated to strengthen the investment needed to ensure future financial stability. Deputy County Executive Mark Deldin and Finance Director Pete Provenzano have worked in conjunction with the Board to ensure we have been fully informed and collaboration on these proposals has taken place.

Similar cooperation has taken place for the Downtown Revitalization Plan, which is part of the County’s 5 Year Capital Improvement Plan. Currently, there is a need for about $92 million in capital improvements over the next five years, which includes renovation projects of the downtown campus at $35 million, and a new parking structure costing $15 million.

By issuing a $25 million bond and utilizing an estimated $10 million in insurance proceeds, the County will be able to address these needs. Through effective space utilization we will able to create more synergy by renovating:

• The Administration Building;

• The Old County Building;

• Circuit Court;

• The Talmer Building;

• The Clemens Center.

Aging infrastructure will not receive a bandage, but a long-term investment that will save money in the long-run, while promoting cooperation with the City of Mt. Clemens.

We are at a time where we can take the future into our own hands and nearly ensure financial stability for years to come. By funding retiree healthcare into 2050 and addressing a large portion of our capital improvement needs, Macomb County’s leadership would be taking advantage of a solution for two looming problems.

In addition, these solutions will be realized while still maintaining a healthy general fund balance and financial outlook.